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What Does It All Mean In Today’s Market?
Orlando Real Estate Market Update 07/13/07
Gitta Urbainczyk, P.A.
The real estate market is facing some of the biggest challenges ever, and will continue to face them for the next three years. That’s the latest forecast with little sign of good news. With this in mind, I am focusing this part of my market update on some of the very confusing terms we all have to deal with when selling real estate . One thing is for sure, whatever value you are talking about, they are all going to change in the near future. For the most part, values all will be going south. In residential real estate, we are dealing with four basic and very different value system approaches.Tax Assessed Value:
The assessed value is the value of your home given to your homesteaded property based on the 1995 Florida “Safe Your Home” law as assessed distributed by the offices of the county tax appraiser. It starts out with the land value which is derived by the cost of the land and sold prices of other similar parcels nearby. Once you build a home on the property, the assessor takes the improved property and derives a value based on other sales in the neighborhood. Then, they apply the county tax formula to get the tax assessed value. The tax assessed value is being adjusted for homestead exception and other exemptions as they may apply. The tax assessed value can be looked at as an arbitrary value and can be challenged by the property owner.
Just Total Value:
The just total value is higher than the assessed value. The just value takes into consideration the market value increase of properties as they sell. The just total value is the value on a homesteaded property as is the property would not be covered under the Florida ” safe your home law”. The total value pricing takes effect once a home is sold and a new owner takes over. It will adjust once the homestead of that property runs out and it will adjust to the new value. This is the reason we are seeing such horrendous increases in property taxes when properties sell (’penned up demand’). I wonder what will happen when values are starting to decline. Will these tax assessments increases reverse themselves?
Appraised Value:
The appraised value is the value of a property given by a property appraiser for a financial institution to finance a property. This is used for financing purposes for a homebuyer, or can be used by a seller to determine a proper selling price. It is a price for that moment in time. Normally, an appraisal is good for no more than 30 days. An appraised value is much like a balance sheet of a company. It is a picture of the financial condition at that moment in time. While it may be an indicator of the financial stature of the company on one day, it could turn the very next due to some capital loss or other factors. Much like the example, an appraisal could substantially change the next day based on a property selling at a much higher or lower price.
Market Value:
The market value is the value of a property that a buyer is willing to pay based on current market conditions, other available homes, recent sales, media reports, and many other negative or positive influences. Market value is the supply and demand value and the most important of all value. Market value has nothing to do with any of the aforementioned values, but they are starting to continuously clash with sellers and buyers in today’s market. Much like the share values of the stock market, the value is whatever the buyers are willing to pay. They are difficult on buyers when prices go up and even tougher for sellers when prices go down. All too often we hear “What do you mean the value of my home is $50,000 less! I will not sell unless I get my money!” Unfortunately, these are hollow words in today’s market that fall on deaf ears. Buyers will simply walk. The faster a seller understands the reality between Appraised Value and Market Value and their dynamics and realities, the faster the sale will happen. Over the next three years, we will see a steep decline in property values because of incredibly high inventory, huge increases in foreclosures and mounting short sales of properties.
How can you protect your appraised value? Do not sell your home. Instead, rent the property until this 5 housing hurricane is blowing thru. If you have to sell and renting is not an option, sell at today’s market value, meaning what a buyer is willing to pay, because today’s market value may not be tomorrow’s market value any more.
Today, I attended a nationwide online seminar of 2,500 agents on the subject of short sales. The prediction: The housing market will get substantially worse and prices will decline. We are going to see a 3-year negative property value adjustment like we have never seen before! Read the newspaper or go online to see the projections of the home builders who forecast huge net losses for the 3rd quarter. Here is what the National Association of Realtors has to say.
According a June 6 report from The National Association of Realtors, the group expects the U.S. median price to drop 1.3 percent in 2007, an estimate that includes all loan sizes. The last time the national median price fell was during the Great Depression in the 1930s, according to Lawrence Yun, an economist for the real estate group.
If your home has yet to sell, it may be overpriced. You need to adjust it, or the market will take it down further than what you want it to be. The other options are to take it off the market or rent it out. The next three years will be a rollercoaster ride in prices. Unfortunately, prices over most of that period will be down.
Thank you and have a great weekend!RISMedia Local Real Estate News, Information, and Listings for Consumers › Edit — WordPress
Gitta“The significant problems we face cannot be solved at the same level of thinking we were at when we created them.” -Albert Einstein |
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